June 2017

A CA spends years studying for various competitive exams and dreams of starting his own practice someday. This CA Day, Bajaj Finserv offers you a chance to relive your dreams and make them come true by introducing exclusive loans for Chartered Accountants (CA).

With a CA loan, you can not only manage your financial goals but also use it to fulfill your dreams.

Here are some of the dreams that a CA Loan can help you fulfill:

Funding for additional course/ higher studies

A CA needs to be constantly updated with current knowledge and rules. For this, you might need to take up additional courses that can help you excel in your profession. A CA loan offers you the additional amount you need to fund your higher studies.

Paying for a new commercial property

After working for five years since he passed his CA finals, Rajiv was all set to start his own company. However, the first hurdle in front of him was to buy a commercial space where he could work from. He found an office space for Rs.8 lakh. However, his saving was just Rs.2 lakh. So, Rajiv decided to avail a CA loan and buy the property immediately. This helped him move a step closer to his dream.

Registration charges for your office

Having an office is much more than just buying it. And who would understand it better than a CA? There are various registration and other charges that accompany your office space. This includes acquiring of licenses from local and civic bodies, registering under various acts, and so on. All these require a significant amount of investment as well. A CA loan can help you with funds to pay these charges as well.

Getting the latest equipment and systems

Starting a new practice or expanding your current one means a requirement of various other equipment as well. These include different types of office furniture, stationery, computers, biometric and other systems as well as network and storage equipment. There might also be a need for various software and other digital resources like cloud servers. All these would require for you to invest financially. And this is not just a one-time thing, you might also have to keep aside funds for regular maintenance and upkeep of equipment and systems. A CA loan ensures that you have funds available for this purpose and don’t have to delay the process due to lack of finances.

Recruiting a team of professionals

The last thing you would want to go wrong in your office is unreliable staff. Your staff is the identity of your company. Ensure that you do not compromise on the quality of human resources just because of lack of funds. You can utilise your CA loan to hire reliable and qualified staff who would help contribute towards your business. A responsible and well-paid team of professionals is much better than any software during the tough times.

However, you have to have fulfill certain eligibility criteria for availing a CA loan.

Being eligible for a CA loan means:

Having a minimum of four years of experience after acquiring a certificate of practice (COP).

Owning a home or commercial space in your name or in the name of your parents.

Drawing a minimum salary of Rs. 75,000 in TIER 1 city or Rs. 40,000 in TIER 2 city.

Submitting of documents such as COP, identity proof and address proof, and on property proof.

Besides the above-mentioned guidelines, there are a few more documents that you need to provide for a CA loan. These are last two years Form 16 with latest pay slips, salary account and bank statements of the last 3 months, your educational certificates, and PAN card copy.

Once you meet all these requirements, you become eligible for a range of benefits that come along with CA loan.

Benefits and features of CA loan:

It is available for all consulting and practising CAs working in private or government offices.

You can avail a loan amount of as high as Rs.30 lakh to meet your business needs.

You do not have to arrange for any guarantor or security to avail this loan.

It comes with flexible repayment tenor options of 12 – 60 months.

You can avail the benefit of flexi loan where you only interest on the amount utilised. You can also prepay the loan as and when you have additional funds for it.

If you are an existing customer, the lender might offer you attractive rate of interest.

Once you finalise on the loan amount and tenor, you are just a few steps away from availing a CA loan. You can easily apply for a loan online and get instant approval

Steps to apply for your CA loan

Step 1: Visit the lender’s website and select the Apply Now button on the CA loan page.

Step 2: Fill in an online application form with your relevant details. You may also have to mention your COP year and if it is active or not. Choose the city you are applying for and mention the loan amount as well and then click Submit.

Step 3: A representative of your lender will get in touch with you. You can upload the documents online or get it collected by a representative from your home or office.

Step 4: Once your application is approved, the amount is transferred to your bank account.

In a nutshell

As a chartered accountant, you are eligible for CA loans if you meet the minimum requirements and avail the range of benefits that come along with it. You also get online account access where you can check your payment details, interest certificate and repayment schedule with ease. Thus, this CA Day, take a bold step towards your dreams and don’t shy away from them due to financial reasons.

If you are a doctor, setting up your own practice could be challenging. It not only requires expertise and medical knowledge but also financial support. A Doctor Loan is like a personal loan for practicing doctors. The loan can help you procure the required licenses, buy required equipment and pay for operational expenses required for the clinic. It could also help you provide better services and facilities to patients, irrespective of whether it is a general, speciality or multispecialty hospital.

Let’s consider the options where you can use your doctor loan funds for establishing your practice:

Buy Advanced Medical Equipment

Each speciality requires different equipment, which will constitute a major chunk of your budget. An orthopaedic doctor will require radiation equipment, whereas an ophthalmologist will require refractors and lensmeter. For a speciality clinic, advanced equipment is a necessity. One of the benefits of availing a doctor loan is that it provides capital of up to Rs.30 lakh without any collateral or security.

Pay for Lease or Land and Construction

Depending on whether you choose to lease an office space or buy a land and construct your clinic, the costs incurred will vary. While leasing an office space, a hefty sum of money must be paid upfront as a deposit. If you choose to buy a land, then you must ensure that it is not an agricultural land and that the paperwork is in order. Registration costs and constructing a clinic or hospital will require a lot of capital. Also, an occupational certificate must be obtained before opening it for patients. Before choosing the location, you should also consider the competition that you could face from other hospitals and clinics in the vicinity.

Employing Staff

Having a skilled labour force is vital to run a successful medical practice. Your clinic will require a receptionist, an accountant, a few nurses and probably a pharmacist. It is crucial to not compromise on money, and focus on hiring the right people. You must perform a background check and verify their credentials before employing them. A Doctor Loan can assist in paying employee salaries and hiring fresh talent.

Buy Other Necessary Equipment

Medical infrastructure such as air conditioning, ambulance, intensive critical unit, hospital beds and CCUs are expensive. However, they are necessary to offer the best facilities for patients. Doctor Loans have flexible repayment tenors, ranging from 12 months to 60 months which are helpful when availing a loan for a large amount.

Marketing

When starting out, you need to reach a maximum number of patients. You need to let them know about your clinic. Therefore, you need a marketing strategy in place. It is recommended that you hire professional agencies to help you. Advertisements in local newspapers, radio channels, billboards, digital and social media marketing are costly but have the potential for high returns. You could use a Doctor Loan with competitive interest rates for funding your marketing strategies.

Use it as Working Capital

While budgeting, one usually tends to accommodate daily expenses required for smooth functioning of the hospital/clinic. You could use the Doctor Loan’s Line of Credit facility to manage cash flows help your practice grow.

Bottom Line:

Setting up your own hospital/clinic is a noble job; however, it is a daunting task. Doctor Loans can get you the financial support you need and help you move forward in your career.

Doctors are regarded as lifesavers, and some of them aspire to set up their own medical practice. However, this requires capital and one can apply for a Doctor Loan to finance this.

However, with the Goods and Service Tax (GST) around the corner, you need to know how it affects you and your finances. Set to roll out from July 1, 2017, GST aims to unify the central and state taxes and bring them under a common umbrella. GST will affect every industry, including those in the medical profession.

Effect of GST on Healthcare Services

One of the major benefits of GST is the reduction in the overall cost of the technology. Currently, the technical machinery and equipment imported into the country are very costly. Under GST the duty levied on the import of such equipment might be allowed as a tax credit.

There are currently eight different taxes being levied on this industry and GST will unify and integrate this complex structure into a single taxation system.

One of the major issues that GST addresses is the inverted duty structure. The GST structure intends to either dispose of the duty structure or introduce a refund of the accrued credit. This proposal will be the biggest advantage for the healthcare sector.

GST will reduce overall transaction cost by eliminating Central Sales Tax (CST). It will also lower the manufacturing cost and improve operational efficiencies. The cost of transporting drugs from one state to another will reduce, as inter-state taxes and tolls are abolished in GST bill.

The unified taxation system will encourage new players to enter the manufacturing aspect of the pharmaceutical market and provide services at competitive prices. The cost of raw material will also decrease, leading to more profits and allowing more investors to invest.

Why do Medical Professionals Need a Loan?

Loans can then be used for renting or leasing office space, buying equipment and hiring staff. The loan can also be utilised by established clinics to renovate their premises or upgrade their equipment to keep up with modern technology.

With better services and facilities, one is able to provide the right treatment for their patients, which results in an increase in business. Finance options for doctors usually fall into the unsecured category, meaning that they do not require a guarantor or collateral to secure a loan.

Doctor loans are available to salaried and self-employed doctors. It requires lesser processing time, has higher approval rates, flexible tenors and lower interest rates. To conclude, there is a suitable doctor loan for every practitioner.

To sum it up

This is the right time to start a business, especially in the healthcare sector. With easily available finance options from various lenders, you don’t have to delay your decision of starting your practice. You can use the funds for expanding your scope of practice, buying machinery and so on. Lenders are offering exclusive loans for doctor at attractive interest rates and flexible tenor options. So, get the financial support you need and take your practice to new heights.

Kashif was a freelancing chartered accountant (CA) since 7 years. He always aspired to start his own business. However, he couldn’t fulfill his dream as he wanted to pay-off his home loan before he took another loan to start his business.

Now that his loan was repaid, Kashif thought of taking a CA loan to start his business. He had seen many of his clients committing the error of not knowing about the loan and falling into a debt trap due to negligence. Kashif didn’t want to commit the same mistake. Thus, he did plenty of research before applying for a CA loan.

Let’s look at everything that one needs to know when applying for a CA loan.

Flexible loans:

When you think of a loan, you usually only think of a term loan where you get the full amount and pay it back in equated monthly installments (EMIs). To make it easier for you to manage your finances, some lenders offer you loan flexibility. The loan amount is disbursed in the form of a line of credit. You can make multiple withdrawals and deposits. You are only charged interest for the amount utilized. You repay the principal at the end of the tenor.

Interest rates:

Some loans can prove to be expensive in the long run. However, when you opt for a CA loan, you get interest rates lower as compared with other loans. This is because the lenders consider you a reliable borrower as you are a chartered accountant. Your EMIs and the interest outgo is influenced with the interest rates. Thus, it is advisable to compare the interest rates from different lenders.

Tenors:

CA loans also come with flexible tenors. If you can afford a higher EMI, you can choose a short tenor. However, for a lower EMI, choose a longer tenor. You can choose from tenors ranging from 12 to 60 months depending on your requirements.

Easy processing:

This tailor-made product is collateral-free. Hence, you can expect a quicker processing time. A CA loan could be crucial to cracking a business deal. Thus, a timely disbursal could be the difference between huge profits and futile deals. Because CA loans are collateral-free, they require less documentation. Hence, they are processed quickly.

Higher loan amount:

Starting or expanding your business requires substantial funds. However, most loans demand a guarantor or a collateral if you are seeking a higher amount. With CA loans, you get loans up to 30 lakh without guarantor or collateral.

Online access:

When you have the responsibility of handling a business, you don’t want to run around for loan statements. To ensure you have all the information in real-time, online portals help you access loan statements and details at the click of a button. All you need to do is key in your user id and password.

Pre-approved offers:

Lenders want to reward their loyal customers. If you are an existing customer, you may be offered attractive deals with lower interest rates. You can choose to avail the offer when you are expanding your practice.

Eligibility criteria:

To avail a CA loan, you must first fulfill certain eligibility criteria. The criteria may vary across lenders and is usually listed on their website. The basic requirements include:

You need to have a practice of a minimum of 5 years

You must have your own home, parental home or office

You need to have a minimum monthly salary Rs.75,000 for Tier 1 city and Rs.40,000 for Tier 2 city

Documents:

While minimum documentation is involved, lack of either document could lead to rejection. The list of documents includes

Certificate of practice

Form 16 for the past two years

Salary slips

Salary account bank statement

Educational certificates

PAN Card

ID proof

Address proof

Property proof

Fees and charges:

Lenders levy a charge if you default on your payment. You could also incur some charges in the form of penal interest, secure fees, foreclosure and part pre-payment charges depending on the lender. You should consider these charges to ensure that the loan doesn’t get costlier in the long run.

To sum it up:

Blindly opting for loans that are not suitable to you could prove futile. CA loans could be of great assistance when trying to setup or expand your business. However, ensure that you know everything about the loan that you are applying for.

In a country, like India, with a rapidly growing population, affordable healthcare is a necessity and not a luxury. According to World Health Organization (WHO), India needs 80,000 more hospital beds. Currently, India has only one hospital bed for 879 people. However, setting up a hospital is a complex process, requiring a lot of paperwork, money and time. Yet, it is essential that this situation is rectified and the best way ahead is by establishing private hospitals.

Let’s go through a list of things that one must consider before setting up a private hospital in India:

Licenses and Permits:

As per the rules and regulations set by the government, a hospital license needs to be availed. The next step is to purchase a piece of land. To start building a hospital, several documents such as a land deed, plan clearance certificate, no objection certificates and finally, an occupation certificate must be obtained. To summarize, numerous permissions must be obtained prior to construction. After construction, to avail water, electricity and sewage facility, permission from the local body must be obtained.

Location:

One must ensure that they choose the right location for their hospital. It must be easily accessible to the public and must be in close proximity to good transportation facilities. It is an added advantage if the area is near the main centre of the town or city. One must also evaluate their competition before building a hospital. It will be difficult to attract patients if there are major hospitals with similar facilities already present in that area.

Services or facilities offered:

One must decide beforehand if they are going to construct a general, speciality or multispecialty hospital. General hospitals diagnose and treat patients in several specializations. Whereas, speciality hospitals can focus on one or two specialities, such as cancer or heart disease. Based on the services offered, you could deploy required medical laboratories, surgery facilities, ambulances and other supporting medical facilities.

Disposal of medical waste:

Disposal of biomedical waste is a grave issue. Obtaining permission from the Municipal Corporation is vital before installing the necessary equipment. Medical waste needs to be categorized and treated accordingly to prevent infections from spreading. Usually, medical waste, except plastics, is disposed of by incineration and permission is required from the corporation before installing this equipment.

Employees:

The doctors, nurses and other support staff are crucial to the hospital’s success. Hence, it is necessary to run a check on their credentials. A training and development program must also be available for staff and measures must be taken to improve the medical technology in the hospital. The price of medical services, the profit margin and the revenue must carefully be considered before providing services to patients.

Business Insurance:

Avail a business insurance to insure your company against financial risk and market fluctuations is a must. They must also ensure that they buy the right insurance to safeguard their company against any liabilities. Similarly, for doctors and hospitals, an indemnity insurance is crucial. Such an insurance ensures that your hospital is secure in case a patient sues you for medical negligence.

Financing Options:

One must also be aware of the financing options available before building a private hospital. You could compare the available options of doctor loans for financing. If you wish to apply for a loan, you should compare the tenor, the interest rates, the fees structure and the repayment options.

To Sum it up

You dreamed of becoming a doctor, now is the time to dream big. To establish a multispecialty hospital and better serve the needs of your patients, get the financial support through a Doctor Loan.

Need urgent finances, but still paying off your home loan? Remember that you can simply apply for a top up loan. With low interest rate and a longer repayment tenor, a top up loan is your best bet at acquiring funds quickly. It is offered by your existing lender over and above your home loan based on certain eligibility criteria, and may be used by you in any way you choose. You may use the finances do something related to your home—be it home renovation, repairs, building an additional asset on your property, etc.—or for something completely unrelated. It could be to fund your own business, travel overseas with family, finance your child’s higher education or even for medical expenses. All in all, a top up loan can be your source of additional financing when you need it most.

What You Should Consider Before Opting For A Top up Loan

There are various scenarios where a top up loan would work as the most favourable source of finance. However, considering that it is, after all, a loan, it does require you to pay interest. Since you are already paying off your home loan, opt for a top up loan cautiously and only after considering the following factors:

Do You Need the Money?

This is the primary question you should ask yourself before applying for a top up loan. It is important for you to closely consider how much you need and what you will utilise it for. Rather than opting for the maximum amount available, borrow just what you need, so that its repayment does not end up becoming a burden.

Calculate your Income

Your income determines your capacity to repay a loan and keep making timely EMI payments. So get the calculations right and understand how much income you have left over after you take care of all your fixed expenses and your home loan EMIs. Analyse whether you have money for additional payments for a top up loan, and go for it only if the answer is yes—but only after you save a small amount from your monthly income for emergencies.

Research Whether You Have Alternative Sources of Finance

A top up loan is not the only option you may have. Consider the sale of an asset, breaking a fixed deposit, or other sources of funding. Once you consider all alternatives, choose a top up loan only if it is the most prudent and financially affordable option. Usually, experts do not recommend breaking or diluting a long-term investment for smaller financial needs.

How is a Top up Loan Amount Calculated?

Since a top up loan is only offered to existing home loan borrowers, it is dependant on your home loan in many ways. Your lender will assign you a top up loan amount depending on the property value of your new home (usually capped at 60% to 70% of your home’s current value) and the outstanding home loan you are still paying off. It also takes into consideration your repayment history and repayment ability based on your income to arrive at the final amount that may be sanctioned to you. Thus, if you apply for a top up loan about 3 years after you take the home loan, chances are that you will be approved for a top up loan of a larger amount.

Benefits of a Top up Loan

Lower interest rates: Interest rates have to be paid over any loan by the borrower. While the interest for other loans such as personal loans may be high, they are much lower for top up loans. This makes top up loans easier to repay.

Longer tenors: The tenor is the time over which EMI payments have to be made towards repayment of the loan. Top up loans feature long tenors that makes it easy for you to process timely EMI payments and repay the loan conveniently. Most top up loans have tenors of about 10 years or more, depending on the time you have left on your home loan repayment.

Quick processing: Since top up loans are borrowed over and above the home loan, the lender usually processes the loans faster as all documents are already present with the lender. This fast processing makes top up loans the perfect source of money when you need it quick. Another advantage is that top up loans are easy to apply for and do not need you to spend a lot of time filling out the application or attach documents.

Tax benefits: Tax savings on a top up loan are based on the purpose for which the loan is being utilized. If it is used in order to construct or repair a home or part of the property, then you can get tax deductions on the interest. Remember, the principal amount of a top up loan does not offer any tax benefits.

Can be used for various needs: A lot of borrowers require top up loans after the purchase of a home in order to renovate it, add to the property or for redoing the interiors. However, there is no restriction on the use of a top up loan. You can use it for any purpose of your choosing.

Eligibility For A Top up Loan

Lenders look at repayment history of your home loan and your income when it comes to approving requests for top up loans. All you need is to have a good repayment record and enough income to support the servicing of the additional loan.

The documents for top up loans are the same as home loan and include:

Address proof

Identity proof

Photographs

Details of income

Bank statements

Property valuation documents

Bajaj Finserv can help you buy your dream home and pay for any additional expenses you might incur. See the features of a top up loan it offers here.

Your credit score is an important part of your loan application, and is carefully scrutinized by lenders. A good credit score can lower your loan interest, so it is important to understand how it works and how a credit score can be improved.

If you have applied for a loan in the past, you may already be familiar with the term credit score. It fulfils an important eligibility criterion when Applying for a Personal Loan, Business Loan or Home loan, along with income, employment status and age. It forms the basis of evaluating your loan application since a lender may either decline or accept your overall application based on your credit score. Therefore, it is important to possess up-to-date information about your credit score and understand how it works. There are numerous organizations that calculate your credit score and understanding how they arrive at the final number can help you increase it, and thereby increase your chances of getting a loan application approved or even getting a low interest rate. Let’s begin with the basics.

Credit Score Explained :

What is a Credit Score?

A credit score is a numerical expression derived from an analysis of a borrower’s credit files. This score accurately calculates and represents a borrower’s creditworthiness. This score often accompanies a credit report generated by credit bureaus. Numerous financial institutions use a credit score as a basis of judging the risk involved in lending money to a particular borrower. It helps lenders speculate whether the borrower is capable of and willing to repay the loan. It also helps them understand the borrower’s previous history of debt, loans and financial behaviour.

Background of Credit Score in India

The system of credit scoring began in India a long time ago. India has four major organisations that calculate credit scores, Credit Information Bureau India Ltd (CIBIL), Equifax, Experian and Highmark. The first among these, and possibly the most popular, is CIBIL, which was established in August, 2000.

Each organisation has its own set of guidelines with regard to measuring a credit score. The score generated from every organisation has its own unique value and is evaluated by financial institutions and lenders when they receive a loan application.

In India, borrowers with a good credit score are highly eligible to have their loan applications approved. Your credit score is impacted by various factors:

Your success or failure at repaying EMIs on time

The number of credit cards you own

The number of rejected loan applications

The various types of debt you have, be it credit cards or a personal loan

Needless to say, it is important to have a good credit history to have a good credit score.

Major Credit Score Companies in India

What are the major Credit Score Reporting Companies in India?

The major credit score companies in India are Equifax, CIBIL, Experian and Highmark. Each of these organizations assign different values to their credit rating. Financial institutions accept scores by any four of these organisations; however, CIBIL is most preferred by lenders. This is why your credit score is often referred to as your CIBIL Score.

What is the difference between Equifax, CIBIL, Experian and High Mark?

Equifax: This credit scoring agency was established in 2010. It charges every individual consumer Rs.400 for their credit score. It scores borrowers on a scale between 1 to 999, with 1 being the lowest score and 999 the highest. The organisation offers its consumers numerous other services like credit information reports, etc.

CIBIL (Credit Information Bureau India Ltd.): This is the most popular credit scoring agency, and was established in 2000. It offers its customers numerous services apart from credit scores like credit information reports, market insights, and more. For financial institutions, it offers services like portfolio review analysis, company bureau analyser, etc. It takes up to 7 days to generate a credit report, and rates individuals between 300 to 900 with 300 being the lowest score and 900 the highest. The company charges Rs.500 for a combination of a credit report and credit score.

Experian: This credit scoring agency was established in 2006 and received its credit licence in 2010. It charges customers Rs.399 with taxes to calculate their credit score. The Experian score also ranges from 300 to 900, with 300 being a poor score and 900 being a high score. This company offers numerous services to organisations and consumers alike. For organisations, it delivers services like customer acquisition, recovery of money, customer management, data and analytics, etc. For consumers, this organisation specializes solely in providing credit information reports. The organisation takes an average of 20 days for generating a credit report.

Highmark: This credit score organisation started in 2006 and was granted a license in 2010. Its scores range from 300 to 850. A score of 720 and above is considered favourable while a score of 640 and below is considered poor. Highmark also offers its consumers a range of services like a credit report, portfolio management, etc. For companies, it offers services like data quality management, credit assist, verification and more. It is a relatively new entrant in the industry and offers a varied set of services.

These top four credit reporting companies have a range of unique credit scoring services. You can choose any one from them depending on your requirements.

All Your CIBIL Score Queries Answered

While each of these credit scoring agencies have their own unique selling points, but CIBIL is the most trusted credit reporting agency in India.

A CIBIL score is normally considered the most accurate and comprehensive. This is mainly because CIBIL not only has the largest collection of consumer information and data, but also considers an extensive range of factors when making their calculations. This means that their score best reflects an individual’s credit profile and history.

Lenders are concerned about getting the most accurate analysis to minimize the risk of approving a loan at low interest to a potentially risky applicant. Thus, they are most satisfied by CIBIL. For example, if a credit scoring agency only considers income as a factor in assessing the creditworthiness of a borrower without other factors, it is possible that the applicant could have pending EMIs that would reduce his repayment ability. Thus, not considering a range of factors can be particularly damaging and may provide inaccurate results. CIBIL currently tops the list by storing, evaluating and providing credit history information of over 550 million Indian borrowers to financial companies, banks, etc.

What is the preferred Credit Score agency in India?

As CIBIL offers a holistic analysis of the creditworthiness of an individual, it is the most preferred form of credit scoring in India. CIBIL takes into account two primary factors when calculating the final score:

A Large Database of Information: The oldest credit scoring company in India, CIBIL works with over 2400 lending companies, banks, financial institutions, NBFCs, etc. to maintain the records of over 550 million individuals. Thus, it has the ability to extract numerous primary and secondary information about an individual, which helps provide an accurate rating of creditworthiness.

Calculations based on Concrete Factors: CIBIL does an extensive analysis of various factors like repayment history, various types of loans taken, the mix of debt taken currently and in the past, the length of an individual’s credit history, etc. These factors help lenders decide if the potential borrowers are likely to honour their loan obligations.

Why is your Credit Score important?

Credit scores are vital because they play a deciding role in two ways:

Whether you can your loan application approved or not

What interest rate your lender offers you

Importance of Credit Score to a Financial lending Institution:

In terms of a lender, a credit score is important because it:

Provides the institution with a clear understanding of the borrower’s creditworthiness

Helps the organisation estimate the amount of funds that may be safely offered based on the borrower’s credit history

Helps the financial institution decide whether to approve or decline a loan application.

Provides the financial institution clarity on the borrower’s history, and his or her success of paying loans in the past

Works as a concrete basis for decision-making

Importance of the Credit Score to a Borrower:

In terms of an individual loan applicant, a credit score is important because it:

Helps the borrower review his or her credit history

Helps the borrower understand his or her creditworthiness, and take steps to improve it.

Impacts the approval of a loan application

Affects the interest rate offered by the lender

What are the factors that impact your Credit Score?

Credit Balance: A credit balance can be described as any amount of unused credit on your credit card. If you use 70% of the available credit, while some individuals use up most of their credit, others ensure they leave some amount untouched. A high credit balance can give you a good score, while a low or non-existent credit balance can lead to a poorer score.

Success at Repaying Past Loans: Any loans taken by you are to be repaid within the chosen tenor. Your success at repaying a loan in the past will greatly influence your credit score. Individuals with less success at repaying old loans are likely to have a poor credit score as compared those who have succeeded in paying loans in a timely manner. If you have prepaid your loans, this may also affect your credit score positively.

New Credit Acquisitions: Every new credit you acquire has the scope to impact on your credit score, positively or negatively. The higher the number of recent credits acquired, the more likely it is that your credit score will be low, since it affects your ability to repay the new loan you are applying for.

Durations of Existing Loans: The duration of a loan is the time period over which you will repay the loan. This can affect your credit score too. For example, if you have a long repayment tenor for an existing loan, this may affect your credit score negatively.

Mix of Debt or Types of Debt Undertaken: Over a period of time, you may have acquired a mix of debt such as credit cards, personal loans, car loans, student loans, etc. A good mix of credit gives you a better score, as it reveals that you are an experienced borrower with a good track record.

Duration of your Credit History: If you haven’t undertaken any credit, you will not have a good credit score! And if you haven’t been financially active, your credit score will reflect poorly as well. So the duration of your credit history matters.

Who checks Credit Score?

A credit score is checked by lenders before providing credit or loans to a borrower. It is used as a means for judging the risk of lending money to a borrower and the borrower’s financial ability to repay the loan. The credit score is calculated by a credit scoring company like CIBIL, who reviews a borrower’s credit history and behavior.

What is Credit Score used for?

It is one of the major eligibility criteria when a borrower applies for loans

It is used to determine a borrower’s creditworthiness

It is used to calculate the interest rate to be offered to a borrower of a new loan

How does a Credit Score look like?

A credit score is usually a numerical figure that is in triple digits. A CIBIL credit score ranges from 300 to 900, and a good score is anything about 750.

What is a good Credit Score?

For Equifax, the highest score is 999, and for Highmark it is 740. For both CIBIL and Experian it is 900. The closer you are to these scores, the better your chances are at acquiring any type of loan.

When is the CIBIL Score Updated?

The CIBIL score is updated every month, so every change in your monthly financial transactions is reflected in your score.

This means that you should be even more careful at paying off your EMIs on time very month as a slight delay may adversely affect your CIBIL score.

What does NH or NA mean in the CIBIL Score?

Receiving NH or NA in your CIBIL score is not a bad sign. It is common for individuals with no credit or loan history to receive such ratings. It could mean one of any three possibilities listed below:

This rating can mean that you possess an ‘add on’ credit card with limited credit exposure.

It could also mean you are relatively new to credit systems and have no credit history as such.

This can also signify that your credit activities have been dormant for a long period of time.

How much Credit Score is required to get a Personal Loan?

How much Credit Score is required to get a Home Loan?

Ideally, you should have a credit score of 650 and above to get a home loan. A higher credit score will ensure a better interest rate for you.

How much Credit Score is required to get a Business Loan?

A CIBIL score of 800 points is ideal in case of a business loan. This is because the loan amounts for business loans are usually much higher than personal loans. Also, business loans are usually advanced to new businesses, which pose more of a risk to lenders.

How much Credit Score is required to get all Loan Products?

On an average, it is preferable for an individual to have a CIBIL score above 600 in order to avail loans.

What are the advantages of having a good Credit Score?

A good credit score increases the chances of your loan application getting approved

It helps process your loan application faster

It helps establish trust with the lender

It leads to a lower interest rate on your loan application

It helps you negotiate better terms with your lender

It helps you get a higher loan amount

How is a Credit Score Calculated?

How is Credit Score Checked?

Your CIBIL credit score is calculated on the basis of various factors such as:

Calculation of new credit: The CIBIL score takes into consideration every new credit you apply for. Each time a new credit is issued the lender goes through a check. The higher your level of credits, the more your credit score will drop.

Check of the time of your previous loans: CIBIL also runs a time check that involves analysing the period of time for which you have had loans in the past. The higher this time is and the more number of EMI payments you have made, the better your score.

Credit limit analysis: The credit limit is an agreed quota of credit that has been agreed upon between you and your lender. When an amount of credit on the credit card goes unused, it is labelled as credit balance. CIBIL intrinsically analyses this balance. If you have a small credit balance or if you have used up all your credit, your credit score result will be lower as compared to applicants with high credit balances.

Scrutiny of your repayment history: This section of the CIBIL tests and reviews your ability to repay a loan by analysing your repayment history in the past. An applicant who has repaid all previous loans within the due time period is more likely to achieve a better score as compared to an applicant who has failed at repaying loans.

Can I check my CIBIL Score myself?

Yes. To check your credit score you can simply log on to the official website of CIBIL and pay a nominal fee. Your credit score will be sent you to along with the credit information report. Even we also have a dedicated content from where you can get more information on How to check CIBIL Score for Personal Loan.

When is Credit Score Checked?

A credit score is an important piece of information and can be checked during any stage of an application for a loan, credit card, top up loan, etc.

You should check your credit score much before you plan to apply for a loan. This way, if you discover that your credit score is low, you can work on increasing it.

What is a Credit Report and How can I get it?

A credit report is a document that entails an in-depth analysis of your credit history and current status. It usually contains:

Personal details such as address

Employment history

Past loans undertaken

Outstanding loans

Delays in repayment

Credit card history and information

You can get your credit history along with your credit score when you visit the websites of the different credit scoring companies in India.

How much do I have to pay to get a Credit Report?

The fees charged for a credit score and report varies from company to company.

Equifax charges you Rs.400 for generating a credit report along with a credit score.

CIBIL charges a fee of Rs.500 for both a credit score as well as a credit report.

Experian provides you a credit report and a credit score for a fee of Rs.399.

Highmark offers you a credit report and a credit score for free.

What happens if someone has a bad Credit Score?

A bad credit score can cause your applications for a loan to be rejected.

It can hamper your reputation with lenders and reduce the level of trust.

A bad credit score can also cause lenders to charge you a higher interest rate.

It can lead to a sanction of a smaller loan amount.

It can delay the processing of your loan application as lenders will take more time to assess your risk and credibility

How can Credit Score be Improved?

A poor credit score can be a problematic affair and can cause a range of adverse effects; however, there are numerous ways to improve your credit rating.

Pay off outstanding debts

Pay your EMIs on existing loans on time

Cancel unused credit cards

Pay off credit card debt with a debt consolidation loan

Take a small personal loan to improve your credit history

Diversify your debt to establish a well-rounded credit history

Don’t apply for any new loans until your score improves

Long-term tips to improve your credit score

Ensure that you do not acquire more credit than you can repay. Always match your income to your loans, and don’t spread your legs outside the financial blanket!

Keep a healthy credit balance on your credit card. A high credit balance creates a good impression and shows that you are a low risk borrower, thus improving your credit score.

Make it a habit to repay all your credits and loans on time and avoid keeping any pending debts.

When is Credit Score Updated?

A credit score reflects changes in your financial behaviour every month, but can take up to year to improve if you are actively working on strengthening your credit score.

How can I correct any error in my Credit Report?

Sometimes, a low credit score is due to an error in your report. These errors can give rise to a false and inaccurate credit scoring, thus damaging your reputation. But there are certain measures that can be taken to correct errors in your credit scoring:

Inform your credit bureau using any medium necessary.

Clearly pick out every mistake that has been made in the report and do not overlook anything.

State all the correct facts in your defence, and explain to the bureau where they have gone wrong and the reasons you think that they may have made an error.

After that, request for the errors to be deleted and the credit score to be re-analysed.

In case you have recently applied for a loan, write a letter to your lender listing the scenario and stating the fact that an error has been made while evaluating your credit score.

Attach and send any documents you deem necessary to keep your stance clear.

Now that you know the answers to all your credit queries, go ahead and apply for a loan to fulfil your needs and dreams. For the best rates in affordable financing along with flexible repayment options and a host of other benefits, visit Bajaj Finserv.

A home loan can be a long-term commitment, and sometimes a floating interest rate can increase your EMIs to an extent when you’re forced to look for the quickest exit. In your hurry to reduce your repayment burden, you may accidently choose to proceed with a home loan balance transfer with a new lender without the necessary due diligence. Since home loan interest rates are at an all-time low with demonetisation and other government measures such as the RERA coming into play, you may be tempted to opt for a quick refinance to take advantage of low interest rates. While a balance transfer or home loan refinance may make your home loan more affordable, not getting it right may end up costing you more.

Consequences of An Unplanned or Hasty Balance Transfer

In certain cases, the new lender’s interest rates might be low only for a certain time period and after that they could increase phenomenally.

The terms and conditions of the new lender could be binding and restrictive. For example, the new lender may have terms that involve you paying a huge fine in case of foreclosure or pay high fees for prepayment.

If you make a switch during the second half of your tenor, you could end up saving much less than you would have if you had switched in the beginning of your tenor.

You may end up with a lender who doesn’t offer convenience in terms of online account management and customer service.

If you hastily shift to a new lender, your old lender may not release your contract easily and create unnecessary issues.

Tips for Performing a Successful Transfer

Before considering a home loan balance transfer, have a conversation with your existing lender and request for lower interest rates. Certain lenders may oblige in order to retain you as their customer.

Perform a thorough study of interest rates offered by various lenders and choose the one with the lowest interest rates.

Apart from paying attention to interest, read the terms and conditions of your new lender carefully and ensure that the terms are not binding or contradictory to your interests in any way.

Compare and analyse customer service of various lenders, take into account reviews of other borrowers, and then choose a lender with good service.

Ensure that the new lender has the provision for prepayment with no strings attached. Certain lenders charge phenomenal fees for prepayment of loan. Hence, when transferring, ensure that no such clauses exist. Prepayment of the loan helps you save money that you would have wasted on additional EMIs.

Remember that transferring a home loan is a long and challenging process, so plan ahead. Be prepared to re-submit documents like address proof, identity proof, etc. and get these ready in advance.

Find out about all the fees and charges associated with the transfer and move forward only if it is truly feasible for you.

Before performing a home loan balance transfer make sure to get an approval from your existing lender.

Ensure that you get all your original documents and paperwork from your existing lender.

Make sure to perform a home loan balance transfer as early in the tenor period as possible. This could save you a lot of money.

Pros of Home Loan Balance Transfer

Although it takes careful research and planning, performing a home loan balance transfer or refinancing your home loan is actually very beneficial for you:

New lenders may offer you affordable interest rates and thus, save you a lot on monthly repayment.

If performed early in the tenor, a home loan transfer can ensure that you save your hard-earned money.

You may be able to benefit from new terms that were absent in your earlier agreement.

You may be able to get an additional top up loan during your home loan transfer and benefit from lower interest and large loan amounts.

You may be able to increase your repayment tenor and reduce your monthly EMIs in case you are falling short of funds.